How to prepare income tax returns
Calculation of Income Tax
Earlier, the taxpayer was confined with delayed procedures of filing manual ITR waiting in long queues but now with digitized way of doing business total computation and filing of income tax is done on-line. E-Filing of ITR to every individual or business enthusiast is now a deal of seconds if the procedure defined by Income Tax department is duly followed as :
Income from house property
Income from profits and gains of business or profession
Income from Capital gains
Income from other sources
The sum of all sources calculated above is further deducted of all deductions and exemptions (for example:- deductions in Section 80C and 80D) available. Certain deductions and exemptions are available to taxpayer for making non taxable investments.
Every year government revises its budget policy and make certain changes in the tax policy of country. It proposes specific tax slab rates in the budget. The final taxable income computed is matched with defined progressive tax slabs defined in the budget and total payable amount is then calculated including all cesses.
Finally, the tax payer on computed taxable income proceeds for filing income tax online on the official web portal of Income Tax department.
Schedule of Filing Income Tax
Income tax on every taxpayer is levied annually considering previous year - as beginning from 1st April to 31st March of the following year and it is calculated on the income earned by him in the Assessment year being taxable in following year. (for example :- For taxing purpose of income earned in 2016-17 , 2017-18 will be considered as Financial Year (FY) ,while 2016-17 will be the taken as Assessment Year (AY). )
ITR 1 (SAHAJ) - This form is used in case of individuals having income below Rs 50 lakh and have their key source of income being Salary income, income from only one house property and income from other sources. It does not include certain income sources as :
Income being received from business or profession & capital gains .
Getting agriculture income more than Rs 5000
Income from holding foreign assets.
ITR-2 - This form is to be used in case of individuals or Hindu Undivided Families (HUF) having key source of income as Income from Salary/Pension, Income from house property and capital gains , having agriculture income above Rs 5000, income received from a partnership firm and income received on holding of foreign assets.
ITR-3 - This form is used to specify income of individuals or HUF having income from their respective business or profession,also including income from House property ,Salary Income and income from other sources.
ITR-4 - This form applies to every individual and HUF having Income from business or profession and have opted for presumptive income scheme under Section 44AD,Section 44AE and Sec 44ADA of the IT Act. Also, this form is applied when turnover of business runs over 2 crore.
ITR-5 - This form applies to tax filing requirement of all business firms including ,LLPs, AOPs (Association of persons) and BOIs (Body of Individuals).
ITR-6 - This form applied to all companies , other than companies exempted under section 11 (being registered for charitable or religious purposes )
ITR-7 - This form applies to all individuals ,companies, trust,educational organisations,agencies and all institutions specified under Section 139(4a) Or Section 139(4b) Or Section 139(4c) Or Section 139(4d) of the IT Act.
Paying Income tax is a compulsory obligation imposed by the government on taxable income of all individuals, companies, LLPs, associations, HUFs (Hindu Undivided families) & all bodies of individuals working either as joint organisation or as artificial judicial person. It is the main source of government revenue levied as direct tax on earnings. In India, the tax department being administered by Central Board of Direct Taxes (CBDT) working under Ministry of Finance defines all basic rules of Income Tax Filing.
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